Date: Tue, 20 Apr 2004 23:11:59 -0700
From: Norm Matloff
To: Norm Matloff
Subject: H-1B bill introduced in Congress
To: H-1B/L-1/offshoring e-newsletter
A tried and true tactic employed by the industry lobbyists to expand the
H-1B program has been to push the Education Button, the all-purpose stun
gun of Capitol Hill. All one has to do is push that button, and the
Congress and the press are rendered senseless.
An education argument popular with the industry lobbyists recently has been
that we "need" H-1Bs with graduate degrees. The argument boils down to two
main premises: (a) A lot of students in U.S. Master's and PhD CS and
engineering programs are foreign students, and "therefore" there must be a
"shortage" of holders of such degrees which the foreign students are
"remedying." (b) Abuse of the H-1B program is limited to holders of
Bachelor's degrees, imported to the U.S. by Indian firms. Both of these
premises are false, as I will explain here.
Before going in to the details, I think it is worth stating here what I will
state at the end:
Bottom line: The premise of the bill is unwarranted. If employers want
workers with graduate degrees, they should hire the tens of thousands of
unemployed American tech workers who have graduate degrees.
(From here on, I will use the term "graduate degrees" to mean Master's
and PhDs.)
Here are the main points:
* H-1Bs with graduate degrees are used as CHEAP LABOR by big firms.
Intel has claimed repeatedly that most of the H-1Bs it hires are
design engineers with graduate degrees. (See my law journal paper,
at http://heather.cs.ucdavis.edu/MichJLawReform.pdf pages 43-44,
for various quotes.) But if you look at the Dept. of Labor H-1B
Web page, you find that the median prevailing wage quoted by
Intel for its H-1Bs is $65K. Contrast that to the fact that the
national median salary for workers with a Master's in
engineering is $82,333 and the median for a PhD is $105,500.
(See reference to 2002 NSPE data at
http://www.soe.stevens-tech.edu/seem/UG/SalaryArticle.pdf)
H-1B law requires that employers pay H-1Bs "prevailing wage,"
but the law and associated regulations are so riddled with loopholes
that they are useless. All the big (and small) firms exploit these
loopholes quite vigorously, in much the same manner as they exploit
loopholes in the tax code. See pp.88-92 in the law journal paper
cited above.
* The fact that so many U.S. graduate degrees are obtained by foreign
students does not mean we "need" so many graduate degrees. Most people
with a graduate degree are not doing work which requires a graduate
degree.
One does not need a graduate degree for most work in the field, including
research and development. For example, Linus Torvalds developed the
Linux operating system while he was an undergraduate. Marc Andreesen
developed MOSAIC, which he later refined into the Netscape Web browser,
when he was an undergraduate. Tim Berners-Lee, the inventor of the Web,
has only a Bachelor's degree, and it is not in computer science. None of
Bill Gates, Larry Ellison and Steve Jobs, founders of Microsoft, Oracle
and Apple, respectively, even has a Bachelor's degree. Even at the
highly R&D-oriented firm which first developed the Internet, Bolt Beranek
and Newman Inc., only 4 percent of the staff have a PhD. I've mentioned
before the Intel recruiters who told me "Intel is not very interested in
PhDs," adding that a PhD would not have enough to challenge him or her at
Intel, except in rare cases.
* If in spite of my comments in the last bullet the industry insists
that it does need people with graduate degrees, then they should hire the
tens of thousands of American programmers and engineers who have graduate
degrees but are unemployed. The industry's refusal to do so shows that
their current pitch based on graduate degrees is just yet another Phony
Education Argument.
* In addition, Americans are now flocking to graduate schools.
In the past, American students "voted with their feet," skipping graduate
school in favor of going directly into industry because they knew a
graduate degree was not needed to be able to do the work in the field and
they correctly perceived that going to grad school was a losing
proposition financially. Meanwhile, the foreign students saw a PhD as a
steppingstone to a U.S. green card. Our National Science Foundation, a
government agency, saw this, and promoted bringing in foreign students,
openly pitching them as a source of cheap labor--first for the meager
graduate student assistantship salary, and then after graduation to hold
down U.S. PhD salaries. (See pp.84ff of my law journal paper cited
above.)
* However, the poor job market of the last few years has caused
U.S. tech graduate programs to be inundated with American applicants.
See for example "Dot-Com Dropouts Go Back to School," by Vanessa Hua, San
Francisco Chronicle, January 27, 2002.
Especially damning is that Thom Stohler, the industry
spokesperson quoted in the enclosed article as saying that they
need H-1Bs because Americans don't go to graduate school,
concedes that there are tons of Americans in graduate school
now. He stated on CNN, "Well, in fact in the last few years
it's been much better." (NEXT@CNN program, CNN, September 28,
2003.)
* Though a small percentage of the foreign students are of
outstanding talent, most are not. The analysis of David North
has shown that foreign PhDs are disproportionately concentrated
in the weaker schools. (See pp.47ff of my law journal paper.)
* The industry also says that we should keep the foreign students
here in the U.S., by giving them H-1B visas and later green cards,
rather than letting them take that supposedly valuable training
back to their home countries and competing with the U.S. If
people are so worried about that (personally, I'm not, as I
don't consider graduate training to be a big deal in the
first place), then they should not allow so many foreign
students to come here in the first place.
And many of the foreign students do eventually return home anyway
(or start high-tech businesses there), after they secure U.S.
citizenship. See http://heather.cs.ucdavis.edu/Archive/Saxenian.txt
* Universities say that they "need" foreign students to fill their
graduate programs. What they aren't telling you is that that
"need" is a selfish one, arising for a desire to build academic
empires. William F. Massy of Stanford University and Charles A.
Goldman of the RAND Corp. show in their study, The Production
and Utilization of Science and Engineering Doctorates in the
United States, that production of PhDs in science and
engineering is geared not to labor market needs, but rather to
the "needs" of university faculty to produce PhDs! A faculty
member's rise in the ranks will depend to a great degree on how
much federal and private grant funds he/she is able to attract,
and how many Ph.D. students he/she produces (the funds are used
to provide financial support to the students). Massy and Goldman
quote a chair of a major Computer Science Department as saying that
he sets the enrollment level for his department's graduate program by
simply multiplying a per-faculty quota for PhDs by the number
of faculty in the department; I can certainly confirm that this
is standard practice.
The text of the bill (House version, HR 4166) is available at
http://www.ilw.com/lawyers/immigdaily/news/2004,0420-hr4166.pdf
Note that the bill attempts to ameliorate its negative impact on
American workers by including a $500 "fraud prevention and detection
fee" on H-1B and L-1 visas. As I have said many times, this is
irrelevant (and is probably a deliberate distraction). The H-1B and L-1
laws are so riddled with loopholes that the employers underpay their
foreign workers while still being in full compliance with the laws and
regulations. So there is no "fraud" involved. Just look at the Intel
salary data for an illustration of this--Intel is entirely within the
law in paying those low salaries. Sadly, a lot of people are going to
be fooled into supporting this bill because of this mainly useless
provision.
Bottom line: The premise of the bill is unwarranted. If employers want
workers with graduate degrees, they should hire the tens of thousands of
unemployed American tech workers who have graduate degrees.
Norm
http://www.computerworld.com/governmenttopics/government/legislation/sto
ry/0,10801,92345,00.html
Effort afoot to exempt 20k from H-1B cap
The bill would allow hiring of more foreign grads with advanced degrees
News Story by Patrick Thibodeau
APRIL 19, 2004 (COMPUTERWORLD) - WASHINGTON -- There's a new push in
Congress to increase by 20,000 the number of foreign workers holding
H-1B visas. Proposed legislation would accomplish that by exempting
foreign graduates with advanced degrees from the visa cap. The bill,
introduced earlier this month by Rep. Lamar Smith (R-Texas), is
supported by Compete America, a coalition of manufacturers, academic
groups and IT vendors such as Microsoft Corp., Intel Corp., Oracle
Corp., and Sun Microsystems Inc.
This year's H-1B cap of 65,000 was reached in mid-February, less than
five months after the Oct. 1 start of the federal fiscal year. Smith's
bill, the American Workforce Improvement and Jobs Protection Act,
wouldn't raise the cap, but it would exempt from that limit up to 20,000
graduates with a master's degree or higher from a U.S. university.
Students hired by universities and research institutions under the H-1B
program are already exempt from the cap.
Most of the H-1Bs that U.S. companies are hiring "are coming out of our
own schools," said Thom Stohler, a vice president at the American
Electronics Association, a Washington-based IT trade group that has
called for a higher H-1B cap. Businesses "are not going to Bangalore to
find people; they are finding them here," he said.
"It's the position of the AEA that individuals who possess a master's or
Ph.D. degree are not stealing American jobs; they are creating American
jobs," said Stohler. Holders of advanced degrees tend to be employed in
research and development work, he said.
Under U.S. immigration law, companies were allowed to begin applying
this month for H-1B visas that will be issued at the start of the 2005
fiscal year. Vic Goel, an immigration attorney in Greenbelt, Md., said
he expects that there will be enough applications between now and Oct.
1 to exhaust next year's cap of 65,000 visas. He said the period for
issuing new H-1B visas that will begin on Oct. 1 could close the next
day.
Any increase in the number of H-1B visa holders will face opposition
from labor groups, especially the IEEE-USA, a unit of the Institute of
Electrical and Electronics Engineers Inc. in Washington that says its
members are facing record unemployment levels.
"We question the need for a new visa exemption," said IEEE-USA President
John Steadman, who noted that foreign graduate students can already work
for two years in the U.S. under existing visa rules. "During that time,
the company can evaluate their skills and petition for a green card on
their behalf," he said.
The bill's prospects are uncertain. The co-sponsors are all Republican,
and this is a contentious year for outsourcing. But Congress has acted
before to increase the H-1B cap in election years.